What changed in this filing

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Item 1. Business

2023-03-10 compared with 2022-03-16 · 82 added, 77 removed, 446 unchanged (26% of the section changed)

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The Company and the Bank are headquartered in Manitowoc, Wisconsin, and the Bank is a member of the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and regulated by the Office of the Comptroller of the Currency (the “OCC”).

The Bank has twenty-one (21) offices, including its headquarters, in Manitowoc, Outagamie, Brown, Winnebago, Sheboygan, Waupaca, Ozaukee, Monroe, and Jefferson counties in the State of Wisconsin.

The Bank has twenty-eight (28) offices, including its headquarters, in Brown, Columbia, Dane, Fond du Lac, Jefferson, Manitowoc, Monroe, Outagamie, Ozaukee, Shawano, Sheboygan, Waupaca, Waushara, and Winnebago counties in the State of Wisconsin.

We serve businesses, professionals and consumers with a wide variety of financial services, including retail and commercial banking.

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Recent acquisitions

Partnership Community Bancshares, Inc.

On July 12, 2019, the Company completed a merger with Partnership Community Bancshares, Inc.

(“Partnership”), a bank holding company headquartered in Cedarburg, Wisconsin, pursuant to the Agreement and Plan of Bank Merger, dated as of January 22, 2019 and as amended on April 30, 2019, by and among the Company and Partnership, whereby Partnership merged with and into the Company, and Partnership Bank, Partnership’s wholly-owned banking subsidiary, merged with and into the Bank.

Partnership’s principal activity was the ownership and operation of Partnership Bank, a state-chartered banking institution that operated four (4) branches in Wisconsin at the time of closing.

The merger consideration totaled approximately $49.6 million.

Pursuant to the terms of the Merger Agreement, Partnership shareholders had the option to receive either 0.34879 shares of the Company’s common stock or $17.3001 in cash for each outstanding share of Partnership common stock, and cash in lieu of any remaining fractional share.

The stock versus cash elections by the Partnership shareholders were subject to final consideration being made up of approximately $14.3 million in cash and 534,731 shares of Company common stock, valued at approximately $35.3 million (based on a value of $66.03 per share on the closing date).

Timberwood Bancshares, Inc.

Tomah Bancshares, Inc.

On May 15, 2020, the Company completed a merger with Tomah Bancshares, Inc.

("Timberwood"), a bank holding company headquartered in Tomah, Wisconsin, pursuant to the Agreement and Plan of Bank Merger, dated as of November 20, 2019, by and among the Company and Timberwood, whereby Timberwood merged with and into the Company, and Timberwood Bank, Timberwood's wholly-owned banking subsidiary, merged with and into the Bank.

("Timberwood"), a bank holding company headquartered in Tomah, Wisconsin, pursuant to the Agreement and Plan of Bank Merger, dated as of November 20, 2019, by and between the Company and Timberwood, whereby Timberwood merged with and into the Company, and Timberwood Bank, Timberwood's wholly-owned banking subsidiary, merged with and into the Bank.

Timberwood's principal activity was the ownership and operation of Timberwood Bank, a state-chartered banking institution that operated one (1) branch in Wisconsin at the time of closing.

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Denmark Bancshares, Inc.

On January 18, 2022, the Company entered into an Agreement and Plan of Merger with Denmark Bancshares, Inc., a Wisconsin corporation, whereby Denmark will be merged with and into the Company.

Pursuant to entering into the Merger Agreement, the Bank and Denmark’s wholly-owned subsidiary bank, Denmark State Bank, will enter into a Plan of Bank Merger whereby Denmark State Bank will be merged with and into the Bank immediately following the merger of Denmark with the Company.

The Merger Agreement has been unanimously approved by the boards of directors of the Company and Denmark.

The transaction is expected to close in the early third quarter of 2022, subject to customary closing conditions, including regulatory approvals and shareholder approvals from both the Company’s and Denmark’s shareholders.

Pursuant to the terms of the Merger Agreement, Denmark shareholders will have the right to receive, at each shareholder’s election, either $38.10 in cash or 0.5276 of a share of the Company’s common stock, subject to share reconciliation, proration, and allocation procedures, such that at least 80% of Denmark shares will receive stock consideration and no more than 20% of Denmark shares will receive cash consideration.

Notwithstanding the foregoing, the aggregate merger consideration is subject to a downward adjustment if Denmark’s tangible equity capital (as calculated per the Merger Agreement) is less than $67,565,297 at the time of closing of the Merger.

On August 12, 2022, the Company completed a merger with Denmark Bancshares, Inc.

("Denmark"), a bank holding company headquartered in Denmark, Wisconsin, pursuant to the Agreement and Plan of Bank Merger, dated as of January 18, 2022, by and between the Company and Denmark, whereby Denmark merged with and into the Company, and Denmark State Bank, Denmark 's wholly-owned banking subsidiary, merged with and into the Bank.

Denmark 's principal activity was the ownership and operation of Denmark State Bank, a state-chartered banking institution that operated seven (7) branches in Wisconsin at the time of closing.

The merger consideration totaled approximately $128.8 million.

Pursuant to the terms of the merger agreement, Denmark shareholders could elect to receive either 0.5276 of a share of the Company's common stock or $38.10 in cash for each outstanding share of Denmark common stock, subject to a maximum of 20% cash consideration in total, and cash in lieu of any remaining fractional share.

Company stock issued totaled 1,579,530 shares valued at approximately $124.8 million, with cash of $4.0 million comprising the remainder of merger consideration.

Hometown Bancorp, Ltd.

On February 10, 2023, the Company completed a merger with Hometown Bancorp, Ltd.

("Hometown"), a bank holding company headquartered in Fond Du Lac, Wisconsin, pursuant to the Agreement and Plan of Bank Merger, dated as of July 25, 2022, by and between the Company and Hometown, whereby Hometown merged with and into the Company, and Hometown Bank, Hometown's wholly-owned banking subsidiary, merged with and into the Bank.

Hometown's principal activity was the ownership and operation of Hometown Bank, a state-chartered banking institution that operated ten (10) branches in Wisconsin at the time of closing.

The merger consideration totaled approximately $130.5 million.

Pursuant to the terms of the merger agreement, Hometown shareholders could elect to receive either 0.3962 of a share of the Company's common stock or $29.16 in cash for each outstanding share of Hometown common stock, subject to a maximum of 30% cash consideration in total, and cash in lieu of any remaining fractional share.

Company stock issued totaled 1,450,272 shares valued at approximately $115.1 million, with cash of $15.4 million comprising the remainder of merger consideration.

At close, the combined company had total assets of approximately $4.2 billion, loans of approximately $3.3 billion and deposits of approximately $3.5 billion.

These values are based on initial fair value estimates and are subject to change.

The Company accounts for these transactions under the acquisition method of accounting, and thus, the financial position and results of operations of acquired institutions prior to the consummation date are not included in the accompanying consolidated financial statements.

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Strategic Plan

The Bank is a relationship-based community bank focused on providing innovative products and services that are value driven to the communities we serve.

The Bank is a relationship-based community bank focused on providing innovative solutions that are value driven to the communities we serve.

The Bank’s culture celebrates diversity, creativity, and responsiveness, with the highest ethical standards.

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They are empowered with the tools to be successful and are held accountable for the results they deliver to our customers and shareholders.

We maintain a strong credit culture as a foundation of sound asset quality, and we embrace innovation and provide the solutions our customers need and expect.

The Bank’s vision is to remain an independent community bank and plans to sustain its independence by remaining one of the top-performing providers of financial services in Wisconsin.

We maintain a strong credit culture as a foundation of sound asset quality.

The Bank’s vision is to sustain its independence by remaining a top-performing provider of financial services in Wisconsin.

The Bank focuses on creating value for its customers and shareholders by forging strong relationships and offering personalized and innovative solutions.

Our strategic priorities are organized around the CAMELS ratings, including Capital, Asset Quality, Management, Earnings, Liquidity, and Sensitivity to Market Rates.

Bank First is focused on building a culture which encourages, supports and celebrates diversity and inclusion for our employees, customers and communities.

This collaboration fuels a stronger foundation for innovation and connects us to our communities.

Our strategic priorities are organized around the CAMELS ratings, including Capital, Asset Quality, Management, Earnings, Liquidity, and Sensitivity to Market Risk.

We have also added a sixth category to prioritize our strategic goals surrounding Information Technology.

Under the heading of Capital, our priorities include (i) growing capital through strong earnings, (ii) maintaining and assessing short and long-term capital goals, (iii) maintaining contingent capital options, and (iv) educating and creating awareness of our Dividend Reinvestment Plan (“DRIP”).

Under the heading of Asset Quality, our priorities include (i) maintaining a strong credit culture;

(ii) being cognizant of layering of risk;

(iii) optimizing the credit life cycle and enhancing credit administration;

and (iv) hiring and training well to support our credit culture.

Under the heading of Management, our priorities are (i) to review and reassess our organizational structure;

(ii) to continue to enhance our succession plan;

(iii) to build trust;

(iv) to provide consistent and clear messaging to our employees, customers and shareholders;

and (v) to sustain and build upon employee engagement.

Under the Earnings heading, our priorities include (i) growing relationships;

(ii) improving the quality of data across platforms;

(iii) exploring and evaluating current and alternative revenue sources;

(iv) to structure a cross-solving program;

(v) to evaluate and pursue prudent acquisitions;

and (vi) to enhance brand awareness.

Under the Liquidity heading, our priorities are (i) to deploy excess liquidity;

(ii) to optimize our customer portfolio;

(iii) to develop the right relationships;

and (iv) to maintain an efficient bank network.

Under the heading of Sensitivity to Market Rates, our priorities include (i) minimizing optionality;

(ii) to assess, determine and implement a deposit mix for the current environment;

and (iii) to maintain rate neutrality with a preference towards asset sensitivity.

Finally, under the heading of Information Technology, our strategic priorities include (i) optimizing our digital strategy to match internal and external customer expectations;

(ii) enhancing and growing our vendor relationships;

(iii) developing a robust data roadmap;

(iv) establishing a Chief Information Officer role and organizational structure for the Information Technology function;

and (v) monitoring the current cybersecurity environment and training employees on risks and appropriate actions.

Under the heading of Capital, our priorities include (i) growing capital through strong earnings, and (ii) assessing and monitoring short and long-term capital goals.

Under the heading of Asset Quality, our top priority is maintaining a strong credit culture.

Under the heading of Management, our priorities are (i) to review and reassess our organizational structure, and (ii) to sustain and build upon employee engagement.

Under the Earnings heading, our priorities include (i) growing and strengthening relationships, (ii) exploring and evaluating current and alternative revenue sources, and (iii) evaluating and pursuing prudent acquisitions.

Under the Liquidity heading, our priorities are to (i) ensure that liquidity levels are adequate for anticipated needs, and (ii) maintain a relationship-centric customer portfolio.

Under the heading of Sensitivity to Market Risk, our priorities include (i) minimizing optionality, and (ii) maintaining rate neutrality.

Finally, under the heading of Information Technology, our strategic priorities include (i) advancing our digital strategy to match internal and external customer expectations, (ii) enhancing the flexibility in our core environment, (iii) monitoring the current cybersecurity environment, and (iii) training employees on cybersecurity risk and prudent responses.

Bank First is a full-service community bank, offering business and retail products and services in communities throughout Wisconsin.

Our branches are located in Brown, Jefferson, Manitowoc, Monroe, Outagamie, Ozaukee, Sheboygan, Waupaca, and Winnebago counties.

Our branches are located in Brown, Jefferson, Manitowoc, Monroe, Outagamie, Ozaukee, Shawano, Sheboygan, Waupaca, and Winnebago counties.

With the closing of the merger with Hometown on February 10, 2023, we also entered Columbia, Dane, Fond du Lac, and Waushara counties.

Our main office is located at 402 N.

8th Street, Manitowoc, Wisconsin.

In addition, we are currently in the process of constructing a new operations center along the I-43 corridor in Manitowoc.

Furthermore, with the proposed acquisition of Denmark, we will also enter into the Shawano County upon the completion of the merger.

Based on the deposit market share reports published by the FDIC on June 30, 2021, Bank First ranks in top two of market share in four of the nine counties in which its branches are located.

The nine counties in which the Bank has offices have an estimated aggregate population of 1,104,554, based on U.S.

We also recently completed construction of a new operations center along the I-43 corridor in Manitowoc.

Based on the deposit market share reports published by the FDIC on June 30, 2022, Bank First ranks in the top two of market share in five of the fourteen counties in which its branches are located.

The fourteen counties in which the Bank has offices have an estimated aggregate population of 1,894,606, based on 2020 U.S.

Census data, and total deposits of approximately $57.49 billion as of June 30, 2022, according to the most recent data published by the FDIC.

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In addition, some of our competitors have assets, capital and lending limits greater than that of the Bank, have greater access to capital markets and offer a broader range of products and services than the Bank.

These institutions may have the ability to finance wide-ranging advertising campaigns and may also be able to offer lower rates on loans and higher rates on deposits than we can offer.

These institutions may have the ability to finance wide-ranging advertising campaigns and may also be able to offer lower rates on loans and higher rates on deposits than

we can offer.

Some of these institutions offer services, such as international banking, which we do not directly offer, except for a limited suite of services such as international wires and currency exchange.

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Our loan review consists of both commercial and retail review where loan files are reviewed and risk ratings are validated.

Both were fully outsourced by the end of 2019 to a firm that specializes in file review and risk rating.

Both are fully outsourced to a firm that specializes in file review and risk rating.

Our policy for reviewing commercial credit files consisted of selecting a percentage of specific files on an annual basis as defined in our loan review plan, and reviewing them for risk rating and policy compliance.

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In addition to the legal lending, management and the board of directors have established a more conservative, internal lending limit.

The Bank’s legal and internal lending limits are a safety and soundness measure intended to prevent one person or a relatively small and economically related group of persons from borrowing an unduly large amount of the Bank’s funds.

The Bank’s legal and internal lending limits are a safety and soundness measure intended to prevent one person or a relatively small and economically related

group of persons from borrowing an unduly large amount of the Bank’s funds.

It is also intended to safeguard the Bank’s depositors by diversifying the risk of loan losses among a relatively large number of creditworthy borrowers engaged in various types of businesses.

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Our investment policy is reviewed annually by our board of directors.

Overall investment goals are established by our board, CEO, and members of our Asset Liability Committee (“ALCO”).

Overall investment goals are established by our board, CEO, and members of our Asset Liability Management Committee (“ALCO”).

Our board of directors has delegated the responsibility of monitoring our investment activities to our ALCO.

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Human Capital Resources

Throughout COVID-19, the health and safety of our employees, customers, and communities we serve has been our top priority, and we continue to do our best to update guidelines and practices in accordance with recommendations by the Center for Disease Control and Prevention and new data as it becomes available.

In response to COVID-19, we quickly implemented extensive safety measures to protect our employees, including heightened sanitary precautions, protective supplies, suspended non-essential business travel, directed employees to work remotely when possible and limited in-person meetings.

We also implemented flexible scheduling and compensation arrangements for employees affected by COVID-19.

Our Company culture emphasizes our longstanding dedication to being respectful to others and having a workforce that is representative of the communities we serve.

Diversity, equity and inclusion are fundamental to our culture.

Diversity, equity and inclusion (“DEI”) are fundamental to our culture.

We believe in attracting, retaining and promoting quality talent and recognize that diversity makes us stronger as a Company.

Our talent acquisition teams partner with hiring managers in sourcing and presenting a diverse slate of qualified candidates to strengthen our organization.

Our DEI Committee is a task force of diverse staff members who are responsible for helping bring about positive change at Bank First and fostering a more diverse and inclusive work environment.

We offer training and education resources for all employees to support our DEI initiatives.

We believe employees to be our greatest asset and that our future success depends on our ability to attract, retain and develop employees.

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As part of our effort to attract and retain employees, we offer a broad range of benefits, including health, dental and vision insurance, life and disability insurance, cell phone and health club reimbursement, an employee assistance program, educational tuition reimbursement, annual clothing allowance, an employee referral program, 401(k) retirement plan, profit sharing, a flex spending cafeteria plan, and generous paid time off.

We believe our compensation package and benefits are competitive with others in our industry.

We believe our compensation package and benefits are

competitive with others in our industry.

For additional information regarding our employee benefit plans, see “Note 17 – Employee Benefit Plans” to our consolidated financial statements included in this report.

As of December 31, 2021, we had approximately 287 FTEs.

Bank First currently has approximately 382 FTEs.

As of December 31, 2022, approximately 78% of our employees self-identified as female and approximately 6% self-identified as people of color.

Twenty-five percent (25%) of our Board members and 50% of our Senior Management team identify as female.

One of our strategic goals is to increase the diversity of our Board in the coming year.

None of our employees are represented by any collective bargaining unit or is a party to a collective bargaining agreement.

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Additional information can be found on our website:

www.bankfirstwi.bank.

www.bankfirst.com.

The information contained on our website is not incorporated in this document by reference.

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Bank holding companies are generally restricted to engaging in the business of banking, managing or controlling banks and certain other activities determined by the Federal Reserve to be closely related to banking.

In addition, the Federal Reserve has the power to order a bank holding company or its subsidiaries to terminate any nonbanking activity or terminate its ownership or control of any nonbank subsidiary, when it has reasonable cause to believe that continuation of such activity or such ownership or control constitutes a serious risk to the financial safety, soundness, or stability of any bank subsidiary of that bank holding company.

In addition, the Federal Reserve has the power to order a bank holding company or its subsidiaries to terminate any nonbanking activity

or terminate its ownership or control of any nonbank subsidiary, when it has reasonable cause to believe that continuation of such activity or such ownership or control constitutes a serious risk to the financial safety, soundness, or stability of any bank subsidiary of that bank holding company.

Source of Strength Obligations.

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Capital Requirements

The Bank is required under federal law to maintain certain minimum capital levels based on ratios of capital to total assets and capital to risk-weighted assets.

The Company and Bank are required under federal law to maintain certain minimum capital levels based on ratios of capital to total assets and capital to risk-weighted assets.

The required capital ratios are minimums, and the federal banking agencies may determine that a banking organization, based on its size, complexity or risk profile, must maintain a higher level of capital in order to operate in a safe and sound manner.

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The following is a brief description of the relevant provisions of these capital rules and their potential impact on our capital levels.

The Bank is subject to the following risk-based capital ratios:

The Company and Bank are subject to the following risk-based capital ratios:

a common equity Tier 1 (“CET1”) risk-based capital ratio, a Tier 1 risk-based capital ratio, which includes CET1 and additional Tier 1 capital, and a total capital ratio, which includes Tier 1 and Tier 2 capital.

CET1 is primarily comprised of the sum of common stock instruments and related surplus net of treasury stock, retained earnings, and certain qualifying minority interests, less certain adjustments and deductions, including with respect to goodwill, intangible assets, mortgage servicing assets and deferred tax assets subject to temporary timing differences.

to temporary timing differences.

Additional Tier 1 capital is primarily comprised of noncumulative perpetual preferred stock, tier 1 minority interests and grandfathered trust preferred securities.

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FDICIA generally prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized.

To be well-capitalized, the Bank must maintain at least the following capital ratios:

To be well-capitalized, the Company and Bank must maintain at least the following capital ratios:

● 6.5% CET1 to risk-weighted assets;

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The Bank was well capitalized at December 31, 2022, and brokered deposits are not restricted.

In 2021, the Bank’s regulatory capital ratios were above the applicable well-capitalized standards and met the then-applicable capital conservation buffer.

Based on current estimates, we believe that the Bank will continue to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2022.

In 2022, the Company and Bank’s regulatory capital ratios were above the applicable well-capitalized standards and met the then-applicable capital conservation buffer.

Based on current estimates, we believe that the Company and Bank will continue to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2023.

The Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Economic Growth Act”) signed into law in May 2018 scaled back certain requirements of the Dodd-Frank Act and provided other regulatory relief.

Among the provisions of the Economic Growth Act was a requirement that the Federal Reserve raise the asset threshold for those bank holding companies subject to the Federal Reserve’s Small Bank Holding Company Policy Statement (“Policy Statement”) to $3 billion.

As a result, as of the effective date of that change in 2018, the Company was no longer required to comply with the risk-based capital rules applicable to the Bank as described above.

The Federal Reserve may however, require smaller bank holding companies subject to the Policy Statement to maintain certain minimum capital levels, depending upon general economic conditions and a bank holding company’s particular condition, risk profile and growth plans.

As a result, as of the effective date of that change in 2018, the Company was no longer required to comply with the risk-based capital rules applicable to the Bank.

The Company crossed above the $3 billion threshold during the third quarter of 2022 and is now required to adhere to these capital rules.

As a result of the Economic Growth Act, the federal banking agencies were also required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s Tier 1 capital to average total consolidated assets) for financial institutions with assets of less than $10 billion.

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In addition, the Federal Deposit Insurance Act provides that, in the event of the liquidation or other resolution of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution, including those of the parent bank holding company.

In October of 2022, the FDIC adopted a final rule to increase the initial base deposit insurance assessment rate by 2 basis points, applicable to all insured depository institutions, and will begin with the first quarterly assessment period in 2023 and will remain in effect until the level of the DIF reserve ratios to insured deposits meets the FDIC's long-term goals.

Standards for Safety and Soundness.

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Sanctions for violations of the Act can be imposed in an amount equal to twice the sum involved in the violating transaction, up to $1 million.

On January 1, 2021, Congress passed federal legislation that made sweeping changes to federal anti-money laundering laws to be implemented in subsequent years.

On January 1, 2021, Congress passed federal legislation that made sweeping changes to federal anti-money laundering laws, subject to pending implementation by regulatory rulemaking.

Most recently, on June 30, 2021, FinCEN published the first set of “national AML priorities,” as required by the Bank Secrecy Act, which include, but are not limited to, cybercrime, terrorist financing, fraud, and drug/human trafficking.

FinCEN is required to implement regulations to specify how covered financial institutions, such as the Company, should incorporate these national priorities into their AML programs.

As of December 31, 2022, no such regulations have been proposed.

Economic Sanctions .

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During 2006, the federal bank regulatory agencies released guidance on “Concentrations in Commercial Real Estate Lending” (the “Guidance”) and advised financial institutions of the risks posed by commercial real estate (“CRE”) lending concentrations.

The Guidance requires that appropriate processes be in place to identify, monitor and control risks associated with real estate lending concentrations.

The Guidance requires that appropriate processes be in place to identify, monitor

and control risks associated with real estate lending concentrations.

Higher allowances for loan losses and capital levels may also be required.

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The Guidance also applies when a bank has a sharp increase in CRE loans or has significant concentrations of CRE secured by a particular property type.

Risk Factors -- We have a concentration in commercial real estate lending which could cause our regulators to restrict our ability to grow – for a discussion of our risks regarding CRE exposure.

Risk Factors -- We are subject to lending concentration risk, which could cause our regulators to restrict our ability to grow – for a discussion of our risks regarding CRE exposure.

Community Reinvestment Act.

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The Bank had a rating of “Satisfactory” in its most recent CRA evaluation.

On May 5, 2022, the OCC, FRB, and FDIC issued a notice of proposed rulemaking to provide for a coordinated approach to modernize their respective CRA regulations, such that all banks will be subject to the same set of CRA rules.

Key elements are expected to include (i) expanding access to credit, investment, and basic banking services in low- and moderate-income communities;

(ii) updating CRA assessment areas by including activities associated with online and mobile banking, branchless banking, and hybrid models;

and (iii) better tailoring CRA evaluations and data collection requirements by bank size and type.

No final rule has been issued, but the rulemaking may affect the Bank’s CRA compliance obligations in the future.

Privacy and Data Security.

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including certain first or subordinate lien loans designed principally for the occupancy of one to four families.

These consumer protections continued during the COVID-19 pandemic.

These consumer protections under the CARES Act continued during the COVID 19 pandemic emergency, and while most of these protections expired in 2022, on January 18, 2023, in its revised Mortgage Servicing Examination Procedures, the CFPB stated it expected servicers to continue to utilize these safeguards, regardless of their expiration.

Non-Discrimination Policies.

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The DOJ has increased its efforts to prosecute what it regards as violations of the ECOA and FHA.

On March 15, 2022, Congress enacted the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) to address references to LIBOR in contracts that (i) are governed by U.S.

(ii) will not mature before June 30, 2023;

and (iii) lack fallback provisions providing for a clearly defined and practicable replacement for LIBOR.

On December 16, 2022, the FRB adopted a final rule to implement the LIBOR Act by identifying benchmark rates based on SOFR (Secured Overnight Financing Rate) that will replace LIBOR in certain financial contracts after June 30, 2023.

The final rule identifies replacement benchmark rates based on SOFR to replace overnight, one-month, three-month, six-month, and 12-month LIBOR in contracts subject to the LIBOR Act.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business